Venezuela Pays off Some Foreign Debt, Combats Currency Speculation

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Merida, 18th September 2013 (Venezuelanalysis.com) – Finance minister Nelson Merentes said on Monday that Venezuela had paid off some of its external debt, with the payment becoming effective today. The amount corresponds to 2013’s debt, but Merentes didn’t specify how much that was.

According to the Venezuelan ministry of planning and finances, Venezuela’s external debt on 31 March this year was US$ 45.518 billion, and internal debt was similar at US$ 43.401 billion. The Central Bank reports international reserves today at US$ 21.969 billion.

Merentes said Venezuela would end 2013 “with total earnings of US$ 42 billion, an amount which guarantees... the fulfilling of requests [for foreign currency] and other economic activity related to national production”.

Talking on private station Globovision, Merentes argued that the government’s system of a fixed exchange rate has allowed it to strengthen its international reserves, and for this reason isn’t considering eliminating the rate.

However he also said Venezuela’s current international reserves are below the minimum level because of monthly payments made from it to Fonden. Fonden is the National Fund for Endogenous Development and its main income comes from petroleum exports. The ministry of planning and finances runs Fonden, disbursing funds for projects that go towards social development.

The government is also looking at a third system for Venezuelans to acquire foreign currency at the set rate of 6.3 bolivars per US$1, and a law regarding currency exchange is under discussion in the national assembly. There are few details on the third system, but Merentes indicated that the dollar would float and the Central Bank and PDVSA will be able to influence the selling price and make sales. He said a new devaluation of the bolivar – last devalued in February – is “ruled out”.

Also today, Humberto Figuera, president of the Venezulena Air Lines Association (ALAV), informed that airlines will inform state organisations when people buy plane tickets but don’t take their flight. The measure is related to currency speculation, where some people acquire dollars at the formal exchange rate from the government, allegedly for travelling, but then sell the currency at the parallel exchange rate, making a large profit.

Meanwhile, on 12 September the government set up a phone line, 0800 SABOTAJE, for citizens to denounce economic or infrastructural sabotage. President Nicolas Maduro argued that there is an “economic war being waged by the Venezuelan rightwing”. So far the line has received over 1,000 phone calls, according to Major General Gustavo Gonzalez, secretary of the Security and Intelligence Unit of the Electricity System.